One such setup occurred in Reliance In on Thursday, March 14, 2002.
The Chart for Reliance gave us these signals:
à On Thursday, Reliance printed an Inside day – Narrow Range for 7 days pattern.
à Reliance has been finding support at 290, and this was mentioned in our Newsletter. On Wednesday, Reliance had a low of 292 and on Thursday, a low of 294.30. The support at 290 was holding.
à The 14-period RSI was now oversold, having dipped below 40 and then rallied to cross above 40. The support level for RSI is 40 when stocks are in an up trend. This support held well.
Here is the chart.
On Friday, we were buyers above 298.4. This value may be obtained from our table giving Contraction Signals. The buy above value for Reliance was at 298.4.
On Friday, Reliance opened with a gap and we were buyers. The trade went well. We could have sold at the close at 308.05 or carried part or all of the trade for Monday, since the stock closed at the top.
